CAD/JPY Continues to Offer Selling Opportunities - 22 December 2015

Christopher Lewis

By: DailyForex.com

The CAD/JPY pair went back and forth during the course of the day on Monday, ultimately settling on a slightly negative candle. Even though this somewhat neutral looking candle could represent a bit of support, quite frankly I feel that any rally at this point in time should find plenty of sellers above. There is a cluster of resistance near the 88 handle, as well as the 89 level above. I would be very surprised to see this market break above the 89 handle, and as a result I am simply waiting to see some type of resistant candle above in order to start selling yet again. After all, the trend is very much to the downside, and I don’t see that changing anytime soon considering some of the fundamentals behind this particular currency pair.

Bank of Japan and Crude Oil

There are 2 things moving this market at the moment in my opinion: The Bank of Japan and its refusal to raise interest rates, which somewhat works against the value of the Japanese yen. So that slows the following of this pair, and keeps it somewhat stable. This is because of interest-rate differentials.

Having said that, the oil markets are most decidedly working against the Canadian dollar in general. While we have made a fresh, new low, I do not expect this market to exactly fall apart. I believe that every time we rally, you have to look at it as a selling opportunity, as you have to think about the flow of not only currency in this market, but crude oil as well.

Canada is an exporter of crude oil, while Japan imports 100% of the petroleum it uses. So in other words, this pair tends to move with the value of crude oil in general. If oil prices go higher, it makes sense that people will want to buy the Canadian dollar over the Japanese yen. Obviously, and works in both directions. As long as the oil markets are soft, this is a great way to play that using currencies.

CADJPY

About the Author
Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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